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Why Hospitality SME Managers Rarely Practice Strategic Planning


In the current business arena stiff competition among various firms has resulted in adoption of strong business strategies by managers in order to remain competitive. Hospitality industries comprises hotels and restaurants which are major sources of revenue in many countries. Strategic planning entails the various policies which a firm emulates in order to effectively allocate its resources. These resources include people and capital. Examples of tools used in strategic planning are PEST (Political, Economic, Social and Technological factors) and SWOT (Strengths, Weaknesses, Opportunities and Threats) (Baum, 1993).In order to be successful Baum, (1995) argues that managers should ask themselves 3 vital questions. First how do they excel? Secondly, what do we do? And thirdly, for whom do we do it? This paper will analyze why SME managers rarely practice strategic planning regardless of its importance in the business operations.

Inadequate management skills

One of the major reasons as to why SME managers rarely emulate strategic planning is lack of proper training. It is important to note that managerial skills are imperative in order to ensure that the objectives of the firms are attained (Beaver and Lashley, 1998). Based on the fact that most of these managers are the only decision makers in the company, they do not recognize the need to undertake more management courses which are needed to improve their management decision (Brian, 2000).Instead, their objective is to maximize profits without considering other environmental factors which may affect the profitability level of their firms.

Unclear goals

In addition, most SME managers have not clearly defined goals. In this way, they do not adopt the strategic planning tools such as the STEER (Socio-cultural, Technological, Economic, Ecological and regulatory factors) analysis (Brownlie, 1994). This makes it possible for the large firms in the hospitality industry to outdo the smaller firms in terms of the number of customers and the level of profitability (Patrick et al, 1993). As stated earlier, SME managers possesses the duty of making key decisions in the company as a result, the evaluation system in most of the SME is weak thus making it impossible for the managers to note the deviations from the goals or getting new ideas on how to achieve their objectives (Curran et al, 1993).

Low employees training

Likewise, unlike in the large corporations where employees are highly recognized and motivated, SME managers in the hospitality industries do not value their employees. Due to the fact that they do not need large number of workers, they do not effectively motivate their employees, an aspect which reduces the productivity of the employees (Boella, 1996). Due to the availability of the large number of hospitality trained graduates in the labour market, SME managers are hesitant to give motivation to their employees leading to a high employee’s turnover. According to Bradford and Duncan (2000), ineffective recruitment procedures emulated by the managers leading to inefficient human resources needed to streamline the strategic planning process in the SME.


From the above discussion it is clear that proper management training should be given to the SME managers in order to enhance their perception of the strategic planning in their firms (Beeton and Graetz, 2001). In the same way managers should design achievable goals in collaboration with other skilled human resource personnel order to ensure that company resources are optimally utilized (Michael and Jude, 2005).Being important stakeholders in firms, employees should be effectively trained in order to ensure that they are aware of the company objectives and their productivity is enhanced (Baum et al 1997). Failure of government support and limited financial resources is a major cause of the SME managers in the hospitality industry to rarely practice strategic planning.


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